Foreclosure Shop   Educational Resources
 

Print Debbie Siegel's Mortgage Minute

Debbie Siegel
 
Tax Tips: Staying on the Good Side of the IRS
 

When wrapping up for 2006 and preparing your tax documents, be aware that interest, closing costs, and points can be tax deductible depending on the type of property (primary residence, second home, or investment property) you are buying or refinancing.

Here's how to keep everything straight:

Points:

    When you purchase a property as your primary residence, points are 100% tax deductible in the year you made the purchase.

    This Article is an excerpt from the 16 Page Print Edition!

    Are YOU getting the print edition of ForeclosuresMass Monthly?

    Get a FREE copy* of this month's newsletter (worth $49.97!) when you pickup your Real Estate Investors ONLY Free Gift (worth over $267.97!)

    First Name:

    Email Address:

    * Next 37 17 investors only!

    If you refinanced your primary residence and paid points, then you have to amortize or spread out the points over the new loan term.

    When you buy an investment property or second home, points are deducted over the life of the loan as well, not 100% in the same year of purchase.

Real estate taxes and mortgage interest:

    Real estate taxes are fully deductible in the year you paid them no matter what type of property is being considered.

    Annual interest paid on your mortgage(s) (reported on Form 1098, which you should receive from your bank by January 31, 2007) is 100% deductible as well. However, depending on the type of property, you may need to be careful how you report it. Investment properties are reported on a different form than the one used to report interest and points for primary and second homes.

    Whether you prepare your taxes or your accountant does, remember to look at your Settlement Statement if you recently closed on a property in order to identify real estate taxes that won't show up anywhere else, as well as pre-paid interest.

Have a question about what's tax deductible and what isn't? Don't rely on "advice" from friends or colleagues. For information regarding your specific question either visit the IRS Website at http://www.irs.gov/ or call your accountant.

Got questions about real estate financing? Contact Debbie@westchester-mortgage.com or 617-965-1236. She'll consider them for inclusion in a future column. Debbie Siegel is president of Westchester Mortgage in Newton, Mass. She is licensed in several Northeastern states.

« Interview with the Expert January 2007  

What did you think of this article? How did this article help you? Let us know, and we just might include your response in the Mail Bag section of the newsletter!
Name: Email:

Did you like this article? You May Also Like:
Steve Krasnow Feature Article: Appraising a Property Without Stepping Foot on the Premises
Steve Krasnow, Certified Residential Appraiser
Determining a property's value in order to make the right offer or bid takes practice and experience. Knowing how to evaluate a property when you dare not step foot past the boundary line is another whole kettle of fish. In this article, Steve Krasnow gives four strategies for determining value - without having to tour the property.
Robert Tenney Legal Corner: Banks are willing to work with investors to find equitable solution
Bob Tenney, Cunningham Machanic
Bob Tenney, attorney at Cunningham Machanic in Natick, is on the frontline of the foreclosure process. Tenney and his firm review claims by lenders to review properties for foreclosure. If proper conditions are not met, they are also the folks who send out demand letters—the step that begins the foreclosure process for the homeowner. "We send the demand letter and give the homeowner time to reinstate their loans. If that doesn't happen we proceed with the foreclosure," says Tenney...
Richard Cohen Interview With The Expert: Richard Cohen
Richard Cohen, Negotiation Coach and Consultant
For any real estate investor, negotiation is a part of everyday life. Whether with tenants, contractors or homeowners, any time you are trying to influence someone else, you are negotiating. This month we speak with Richard Cohen, a negotiation coach, consultant and real estate investor, to understand more about this critical skill...
Jeffrey Chalmers Feature Article: Conventional Financing for Less Than Stellar Credit
Jeffrey Chalmers, Real Solutions LLC
Have a so-so credit score and need financing but aren't ready to go the private money route just yet? You can still get conventional financing - if you use a combination of lender and seller monies. Mortgage expert Jeffrey Chalmers explains the lending process and what banks look at when determining your loan amount and how you can work with motivated sellers to help finance that next deal.
Joseph Roche Feature Article: Use Exit Strategies to Reach Your Investing Goals
Joseph A. Roche
Planning your exit strategies will help you anticipate potential opportunities and problems and how you'll deal with them - as well as ensuring that you don't lose money on a deal. Real estate investor Joseph Roche discusses the six most common exit strategies, including wholesaling and lease options, and how and when to use each one to reach your investing goals.
Sharon Teitelbaum Feature Article: Getting Clear For a Great Next Year
Sharon Teitelbaum, MA, PCC
Lots of people set goals, but as experienced career coach Sharon Teitelbaum explains, that alone is not enough. Read on as Sharon offers five specific recommendations - recommendations which go beyond simply setting goals - to help you start or grow your real estate investment business in the coming year.
Lois Geller Feature Article: Using Direct Mail Lists to Reach Potential Home Buyers
Lois K. Geller
Rookie real estate marketers spend 90% of their time on creative when putting together a direct mail campaign. Lois Geller explains why this is a backwards approach - and why you should focus on building a targeted list instead.
Dominic Kirchner Success Story: One Deal, $90,000...
Dominic Kirchner II, Exit Realty Center
Full-time realtor and professional investor, Dominic Kirchner II, received his Foreclosures Mass email one Friday afternoon. After reviewing the stats, he quickly downloaded the data and sent out inquiry letters to the people who had received foreclosure notices...
Judy Carryl-Young Interview with the Expert: Incorporate Real Estate Into Your Financial Plan
Judy Carryl-Young, Ameriprise Financial Services, Inc.
Financial planners often see clients who want to put everything they own into real estate . . . sometimes with disastrous results. In this interview, licensed financial planner Judy Carryl-Young explains why single asset allocation may not be the best choice for you and how you can maintain your financial security by keeping a diversified portfolio.
Ann Bellamy Feature Article: How to Become Financially Literate - Without Getting a Degree in Finance
Ann Bellamy
Think you need a finance degree to understand the real estate "numbers" game? Think again. Ann Bellamy, real estate investor and hard money broker, gives you seven tips on how you can become financially literate and comfortable with real estate investing. (Hint: Don't be afraid to take chances.)

Copyright © 2003-2010 ForeclosuresMass Disclaimer/Policy Media Inquiries
ForeclosuresMass is a division of ForeclosuresMass, Corp. For more foreclosures, visit: RI CT NH VT ME MA DE CA MD PA NJ